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DENVER – January home sales were 6.3% higher than those one year ago, about the same year-over-year increase seen in December. At the same time, anticipated seasonal trends resulted in 31.7% fewer sales in January than December. Since January 2009, the average drop in sales from December was 27.6%. Over the last 12 months, the average year-over-year increase in sales has been 5.6% and only two months, November and October, did not rise above year-ago sales. The Median price of all homes sold in January was $200,714, or 6.7% higher than January 2015. The inventory of homes for sale remains very tight in many metros across the country, at a level that is 14.7% lower than one year ago. At the rate of home sales in January, the national Months Supply of inventory was 4.6, down from 5.2 one year ago. For this month’s housing report infographic, visit http://rem.ax/216Glx3.
“While home sales in the month of January are usually a little slow, it’s nice to start the year with stronger sales than we saw last January. Mortgage interest rates remain about the same as one year ago and very close to historic lows. More reasonable price appreciation is giving current homeowners improved equity, while not significantly impacting affordability for buyers,” said Dave Liniger, RE/MAX CEO, Chairman of the Board and Co-Founder.
“Home valuations continue to rise as the economy strengthens and buyers find homeownership often cheaper than renting. The number of potential homebuyers outpaced sellers in some markets. On the other hand, some areas are more balanced, producing slower growth or even a slight decline in some months. It is important to remember that tepid growth is not necessarily a cause for concern, but rather a sign of a healthy and sustainable market,” added Bob Walters, Quicken Loans, Chief Economist.
Closed Transactions – Year-over-year change
In the 52 metro areas surveyed in January, the average number of home sales were 6.3% higher than one year ago, but were 31.7% lower than the previous month. January home sales are typically less than those in December and since January 2009, the average decrease has been 27.6%. January home sales appeared to be especially strong in the northeast, in places like Boston, Philadelphia, Trenton, Manchester and Burlington. In December, 38 of the 52 metro areas surveyed reported higher sales on a year-over-year basis with 13 experiencing double-digit increases: Trenton, NJ +31.3%, Burlington, VT +30.9%, Manchester, NH +27.0%, Boston, MA +22.1%, Philadelphia, PA +16.8%, and Minneapolis, MN +16.2%.
Median Sales Price
The Median Sales Price for all homes sold in the month of January was $200,714, down 2.3% from December. On a year-over-year basis, the Median Sales Price has now risen for 48 consecutive months, but January’s increase of 6.7% is less than the average of 7.6% for each month in 2015. A low inventory supply continues to pressure prices, although price increases have been moderating over the last few months. Among the 52 metro areas surveyed in January, 49 reported higher prices than last year, with 15 rising by double-digit percentages, including Tampa, FL +19.4%, Nashville, TN +16.1%, Trenton, NJ +15.2%, Orlando, FL +14.6%, Des Moines, IA +13.9% and Denver, CO +12.9%.
Days on Market – Average of 52 metro areas
The average Days on Market for all homes sold in January was 71, up 4 days from the average in December, but 9 days lower than the average in January 2015. January becomes the 34th consecutive month with a Days on Market average of 80 or less. In the two markets with the lowest inventory supply, Denver and San Francisco, Days on Market was 40 and 36 respectively. Only four metro areas had a Days on Market average of 100 or greater; Burlington, VT 103, Des Moines, IA 105, Chicago, IL 107 and Augusta, ME with a 165-day average. Days on Market is the number of days between when a home is first listed in an MLS and a sales contract is signed.
Months Supply of Inventory – Average of 52 metro areas
The number of homes for sale in January was 5.0% lower than in December and 14.7% lower than in January 2015. The average year-over-year loss of inventory for each month in 2015 was 12.2%. Based on the rate of home sales in January, the Months Supply of Inventory of 4.6 was slightly lower than December’s 4.9, and was lower than the 5.2 average in January last year. A 6.0 Months Supply indicates a market balanced equally between buyers and sellers. Augusta, ME continued with the highest January supply at 12.7. Five metros had a supply of 2 months or less, including Denver, CO 1.2, San Francisco 1.4, Seattle 1.5, Portland, OR 1.7 and Dallas-Ft. Worth, TX 2.0.
For specific data in this report or to request an interview, please contact (303) 796-3405 or email@example.com.
It’s Official: 2015 Was a Banner Year in Housing, but What’s Next
With the latest numbers on existing- and new-home sales from the National Association of Realtors®, we can now close the books on 2015. And quite a year it’s been! As we’d expected, 2015 produced major growth and some big-time milestones in housing’s recovery.
How good was it? Total home sales grew 7% over 2014 for the best year since 2007, based on 6% growth in existing-home sales and 15% growth in new-home sales. The increase in 2015 was a stark contrast to the decline in total sales in 2014.
And en route to housing’s definitive recovery in 2015, we hit plenty of landmarks—including a new nominal record for the median price of existing homes in June, a substantial decline in distressed sales, an uptick in the share of first-time buyers, and an increase in the share of new homes among total sales.
What drove the market last year
We estimate from monthly sales and survey data from NAR that sales to first-time buyers were up 12%. An improving economy, pent-up demand, and strong affordability brought more millennials and other first-time buyers into the market.
Sales to buyers relocating or resulting from a job change were up 8% as the country saw close to 2.8 million jobs created and the unemployment rate fell to 5%.
Demographics were a driving force behind strong demand for housing in 2015 as we returned to a more normal pace of household formation related to the healthy job market.
The new-home market grew in part because of builders responding to stronger and more consistent demand from entry-level buyers. As a result of product starting to shift, the median price of a new home ended the year at $288,900, down 4.5% from last year.
Not everything was about rainbows and green pastures, however. Distressed sales were down 19% as a result of fewer foreclosures and short sales. Sales to investors were down 10% as fewer distressed sales provided fewer bargains. Even sales to international buyers were down 12% due to weak economic conditions abroad, combined with a much stronger dollar.
What lies ahead
We are expecting growth again in 2016, but it will be more moderate for existing-home sales—and just a bit stronger for new-home sales. The demographics that fueled all that growth in 2015 should be just as strong in 2016. More employment growth should lead to similar household formation, and affordability will still favor buying over renting for those who are qualified and ready to settle down.
The year ahead should also see further gains in first-time buyers and more sales and purchases by retirees who are seeing their opportunity to capture the price appreciation they have enjoyed since 2011 and move to a home better suited for their retirement.
January is off to a good start for our growth forecast materializing in 2016. Despite the nauseating declines and turbulence in the financial markets, consumer confidence stayed firm and even increased in January. Likewise, we have seen a surge in visitors, searches, and listing views on realtor.com®, just as you would expect after the doldrums of the holidays.
It appears that consumers looking to buy in 2016 are heeding our advice and getting started in their home search. And ironically, those weak financial markets just gave them an early housewarming gift: Mortgage rates are lower now than when the year began.
The two biggest factors that held the market back in 2015 are also the primary problems now: tight supply and tight credit. Supply should improve somewhat in 2016 as new construction grows and as more existing homeowners such as retirees decide that it is the perfect year to sell and buy.
The tight credit situation is not likely to improve dramatically in 2016, so one of the best moves potential buyers can make is to work on increasing their credit score. Start now.
Jonathan Smoke is the chief economist of realtor.com, where he analyzes real estate data and trends to develop market insights for the consumer.